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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
Verisk Analytics Inc has a M-score of -2.82 suggests that the company is not a manipulator.
During the past 7 years, the highest Beneish M-Score of Verisk Analytics Inc was -2.34. The lowest was -2.98. And the median was -2.64.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Verisk Analytics Inc for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 0.7785||+||0.528 * 1.0395||+||0.404 * 0.8797||+||0.892 * 1.1025||+||0.115 * 1.1965|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9273||+||4.679 * -0.0598||-||0.327 * 0.8588|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $206 Mil.|
Revenue was 423.554 + 409.643 + 332.463 + 438.597 = $1,604 Mil.
Gross Profit was 251.084 + 239.97 + 225.632 + 262.017 = $979 Mil.
Total Current Assets was $705 Mil.
Total Assets was $2,675 Mil.
Property, Plant and Equipment(Net PPE) was $273 Mil.
Depreciation, Depletion and Amortization(DDA) was $138 Mil.
Selling, General & Admin. Expense(SGA) was $223 Mil.
Total Current Liabilities was $609 Mil.
Long-Term Debt was $1,136 Mil.
Net Income was 88.099 + 115.558 + 87.223 + 96.441 = $387 Mil.
Non Operating Income was 0.126 + 0.009 + 0.007 + 0.001 = $0 Mil.
Cash Flow from Operations was 54.007 + 232.828 + 120.468 + 139.761 = $547 Mil.
|Accounts Receivable was $241 Mil.
Revenue was 390.356 + 376.697 + 289.258 + 398.863 = $1,455 Mil.
Gross Profit was 237.927 + 233.065 + 209.703 + 242.114 = $923 Mil.
Total Current Assets was $494 Mil.
Total Assets was $2,439 Mil.
Property, Plant and Equipment(Net PPE) was $186 Mil.
Depreciation, Depletion and Amortization(DDA) was $125 Mil.
Selling, General & Admin. Expense(SGA) was $218 Mil.
Total Current Liabilities was $585 Mil.
Long-Term Debt was $1,267 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(206.473 / 1604.257)||/||(240.562 / 1455.174)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(239.97 / 1455.174)||/||(251.084 / 1604.257)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (704.563 + 272.875) / 2675.277)||/||(1 - (493.609 + 185.928) / 2439.351)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(125.119 / (125.119 + 185.928))||/||(138.193 / (138.193 + 272.875))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(223.01 / 1604.257)||/||(218.136 / 1455.174)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((1135.645 + 608.743) / 2675.277)||/||((1266.91 + 585.136) / 2439.351)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(387.321 - 0.143||-||547.064)||/||2675.277|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Verisk Analytics Inc has a M-score of -2.82 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Verisk Analytics Inc Annual Data
Verisk Analytics Inc Quarterly Data